Expeditors International of Washington: A Bet on Global Trade

Expeditors International of Washington is a global logistics company that arranges the movement of goods by air, ocean, and ground, while also offering customs brokerage and supply chain services. It operates with an asset-light model, meaning it does not own planes or ships, which allows it to stay flexible and cost-efficient across economic cycles. Over the years, Expeditors has built a reputation for disciplined execution, strong customer service, and reliable returns, supported by its in-house technology platform. The question is: Does this logistics specialist deserve a place in your portfolio?

This is not a financial advice. I am not a financial advisor and I only do these post in order to do my own analysis and elaborate about my decisions, especially for my copiers and followers. If you consider investing in any of the ideas I present, you should do your own research or contact a professional financial advisor, as all investing comes with a risk of losing money. You are also more than welcome to copy me. 

For full disclosure, I should mention that I do not own any shares in Expeditors at the time of writing this analysis. If you would like to copy or view my portfolio, you can find instructions on how to do so here. If you want to purchase shares or fractional shares of Expeditors, you can do so through eToro. eToro is a highly user-friendly platform that allows you to get started on investing with as little as $50.

The Business

Expeditors International of Washington is a global logistics and freight forwarding company founded in 1979 and headquartered in Bellevue, Washington. It operates across more than 100 countries with over 170 offices and offers a full suite of third-party logistics services. These include air and ocean freight forwarding, customs brokerage, warehousing and distribution, order and inventory management, and specialized project cargo solutions. The company acts as a freight forwarder by purchasing cargo space in bulk from carriers such as airlines, ocean shipping lines, and trucking companies, and reselling that space to customers at competitive rates. Expeditors does not own aircraft or ships, choosing instead to operate a non-asset-based model that emphasizes flexibility and cost-efficiency. This allows the company to scale operations dynamically and avoid the risks associated with owning transport assets. Its revenue is fairly evenly distributed across airfreight, ocean freight, and customs brokerage and other services. Expeditors serves a highly diversified customer base across industries such as electronics, healthcare, automotive, aerospace, and consumer goods, with no single customer accounting for more than five percent of revenue. The company’s competitive moat is built around exceptional execution, operational flexibility, and customer trust. Because Expeditors doesn’t own ships or planes, it can quickly adapt when market conditions change. Its business stays lean and responsive. The company also uses its own custom-built global technology system to connect all its offices and services. This system helps track shipments in real time, ensures consistent service for customers everywhere, and makes it easier to follow trade rules across countries. Expeditors is known for being dependable, especially when things go wrong - like when trade rules suddenly change, ports are backed up, or natural disasters disrupt supply chains. In those situations, companies often rely on experienced partners like Expeditors to find solutions and keep goods moving. Because Expeditors has strong, long-term relationships with shipping and airline carriers, it can often secure space for shipments even when demand is high and capacity is limited. This makes it a trusted partner for customers facing complex logistics challenges. In an industry that often appears commoditized, Expeditors stands out through its focus on execution quality, its global reach, its customer-centric culture, and its ability to solve complex logistics challenges.

Management

Dan Wall serves as the CEO of Expeditors International of Washington, a role he assumed in April 2025 after more than three decades with the company. His career began in 1987 in Seattle, where he started as a messenger responsible for handling customs documents. Over the years, Dan Wall advanced through a wide range of operational and leadership roles across airfreight, customs brokerage, and district management, steadily building a reputation for exceptional customer service and team development. In 1992, Dan Wall was named District Manager of Denver, where his focus on service excellence led the branch to earn Expeditors’ Quality Branch of the Year award. He later led the Seattle office to similar recognition, including Global Branch of the Year in 2000. These early leadership roles showcased his ability to build high-performing teams and deliver consistent results. Over the following two decades, Dan Wall advanced through several senior roles, including Global Director of Account Management, Vice President of Order Management, and Senior Vice President of Ocean Services. In 2015, he became President of Global Products, followed by roles as President of Global Services and, most recently, President of Global Geographies, where he oversaw operations in more than 100 countries. Dan Wall is a licensed U.S. Customs Broker, IATA/FIATA certified, and holds an Executive MBA from Seattle University. He has played a key role in shaping Expeditors’ values-driven culture, with a focus on sustainability and inclusion. He was instrumental in launching the company’s Environmental program and spearheaded Opportunity Knocks, an internship and work-study initiative for underserved youth, as well as a veteran recruitment program designed to support those transitioning from military service. Known for his deep institutional knowledge, operational discipline, and people-first leadership style, Dan Wall brings a unique combination of experience and commitment to the CEO role. His journey from entry-level messenger to chief executive is a reflection of both his dedication and the strong culture of internal development at Expeditors. As CEO, Dan Wall is expected to continue advancing the company’s long-term strategy of profitable, organic growth while reinforcing its reputation for service excellence and reliability in global logistics.

The Numbers

The first number we will look into is the return on invested capital, also known as ROIC. We want to see a 10-year history, with all numbers exceeding 10% in each year.  The company has consistently achieved a high ROIC above 20% every year for the past decade. Expeditors consistently delivers a high ROIC because of how it runs its business. It operates an asset-light model, meaning it doesn’t own ships or planes but instead leases space from carriers as needed. This keeps capital requirements low and enhances returns. With fewer fixed assets to manage, more of each dollar in revenue flows through to profit, giving the company strong operational leverage as it grows. Expeditors also benefits from its global scale and long-standing relationships with airlines and ocean carriers, which help secure capacity and manage costs even in tight markets. At the same time, it maintains strict cost discipline and a culture centered on performance and accountability, supporting strong profitability across its network. Rather than investing heavily in physical infrastructure, the company focuses its capital on technology, employee training, and expanding its global footprint, areas that improve service quality and margins without tying up large amounts of capital. This disciplined, flexible model has allowed Expeditors to generate strong returns year after year. The years 2021 and 2022 were outliers, as global supply chain disruptions caused freight rates to spike and capacity to tighten sharply. This created a highly favorable pricing environment, boosting margins and driving ROIC significantly above typical levels. As such, the ROIC in the remaining eight years offers a more reliable view of what investors can expect going forward.

The next numbers are the book value + dividend. In my old format this was known as the equity growth rate. It was the most important of the four growth rates I used to use in my analyses, which is why I will continue to use it moving forward. As you are used to see the numbers in percentage, I have decided to share both the numbers and the percentage growth year over year. To put it simply, equity is the part of the company that belongs to its shareholders – like the portion of a house you truly own after paying off part of the mortgage. Growing equity over time means the company is becoming more valuable for its owners. So, when we track book value plus dividends, we’re essentially looking at how much value is being built for shareholders year after year. Over the past three years, Expeditors’ equity has gradually gone down. This is mainly because the company has chosen to return some of its profits to shareholders instead of reinvesting everything back into the business. These actions naturally reduce the equity shown on the balance sheet. Some of the decline also comes from accounting adjustments that don’t reflect any issues with the company’s performance. For example, since Expeditors operates globally, it needs to convert the financial results of its international offices into U.S. dollars. When exchange rates fluctuate, it can lead to gains or losses on paper that affect equity, even though no actual money is gained or lost. Another example is stock-based compensation. When employees receive shares as part of their pay, the company often sets aside cash to cover taxes, and this gets recorded as a reduction in equity. These adjustments are normal for a company of Expeditors’ size and global presence. The overall decline in equity is not a sign of financial weakness, but rather a reflection of a disciplined and shareholder-focused approach to managing capital.

Finally, we will analyze the free cash flow. Free cash flow, in short, refers to the cash that a company generates after covering its operating expenses and capital expenditures. I use levered free cash flow margin because I believe that margins offer a better understanding of the numbers. Free cash flow yield refers to the amount of free cash flow per share that a company is expected to generate in relation to its market value per share. It is not surprising to see that Expeditors has consistently generated positive free cash flow every year over the past decade. Free cash flow was unusually high in 2021, 2022, and 2023 due to the global supply chain disruptions during that time. Tight capacity and elevated freight rates led to a surge in revenue and profit, which in turn drove significantly higher free cash flow. In 2024, free cash flow declined sharply as the freight market began to normalize. Shipping volumes and rates came down from their peak levels, leading to a drop in both revenue and cash generation. Meanwhile, the company continued to invest steadily in the business, which further narrowed the gap between cash inflows and outflows. In short, the elevated free cash flow of prior years reflected an exceptional environment, while the decline in 2024 signals a return to more typical levels. Expeditors pays dividends and regularly repurchases its own shares. As the business grows and generates more free cash flow, investors can reasonably expect that both dividends and share buybacks will increase over time. The company has shown a clear preference for returning excess cash to shareholders rather than letting it accumulate on the balance sheet. The current free cash flow yield suggests that the shares are trading at a premium valuation. However, we will revisit valuation later in the analysis.

Debt

Another important aspect to consider is the level of debt. It’s crucial to assess whether a business has manageable debt, ideally, debt that could be repaid within a three-year period. I calculate this by dividing total long-term debt by earnings. In the case of Expeditors, the result is straightforward: the company has no debt. Personally, I prefer companies that are debt-free, so this is a very encouraging sign. In fact, Expeditors has operated without any debt for more than a decade, which shows that the company manages its finances carefully and doesn’t rely on borrowing to grow.

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Risks

Competition is a risk for Expeditors because the global logistics industry is highly competitive and constantly evolving. While relatively few companies offer a full range of global logistics services, Expeditors faces pressure from all sides: large multinational players, niche local providers, and well-funded technology startups. Some competitors have more financial resources and are expanding through acquisitions or investing heavily in new tools like automation, real-time tracking, and artificial intelligence. Traditional carriers such as shipping lines and airlines are also entering the logistics space, aiming to offer complete supply chain solutions that could bypass companies like Expeditors. At the same time, digital-first entrants are building platforms that make quoting, booking, and tracking easier and more transparent, which could lead to lower pricing and tighter margins across the industry. Price and service quality remain the main reasons customers choose one logistics provider over another. Many large companies work with several providers and frequently request bids to get better terms. Competitors may offer lower prices, longer payment periods, or more favorable contract terms to win new business. If Expeditors cannot match these offers or continue to stand out through service and reliability, it risks losing customers or facing pressure on profitability. Although Expeditors has built a strong reputation through consistent execution, customer service, and organic growth, the competitive landscape is shifting quickly. Its advantage is real, but not guaranteed, especially as technology becomes a bigger part of how logistics services are delivered and priced.

Macroeconomics is a risk for Expeditors because the company’s performance is closely tied to the health of global trade and broader economic conditions. When international commerce slows, so does demand for freight forwarding, customs brokerage, and other logistics services - the core of Expeditors’ business. Expeditors is exposed to a wide range of macroeconomic factors. A global recession, slower industrial production, or a drop in consumer demand can quickly reduce the number of goods being shipped. This was evident in 2023, when trade volumes returned to more typical levels after the pandemic surge and customers reduced excess inventories. Since Expeditors does not produce or sell physical goods, its revenue depends heavily on the flow of shipments across borders. It has limited ability to predict or influence these trade cycles. Cost inflation is another important risk. As a service-focused company, Expeditors’ largest expense is labor. With around 18.000 employees, many located in higher-cost regions, rising wages and benefits can put pressure on margins. Fuel prices are also a key macro factor. Even though Expeditors does not own planes or ships and therefore does not buy fuel directly, changes in fuel prices still affect the business. Carriers pass on fuel surcharges to forwarders and customers. When fuel prices rise, shipping becomes more expensive, and customers may choose slower or cheaper transport options, which can reduce Expeditors’ shipment volumes or revenue per shipment. Lower fuel prices can have the opposite effect, increasing carrier activity and creating downward pressure on rates. Interest rates and currency movements add further uncertainty. Higher interest rates can slow down economic growth and trade activity.

Relying on service providers is a risk for Expeditors because the company does not own the transportation assets it depends on to move goods. As a non-asset-based logistics provider, Expeditors purchases cargo space from air, ocean, and ground carriers, then resells that space to its customers. This model gives the company flexibility and keeps capital costs low, but it also means Expeditors is heavily dependent on the availability, reliability, and pricing decisions of third parties. If service providers do not have enough capacity, whether due to high demand, labor shortages, equipment issues, or external shocks like a health crisis or geopolitical disruption, Expeditors may struggle to secure space for its customers' shipments. This can lead to delays, missed deliveries, or the need to reroute freight, all of which can hurt service quality and customer satisfaction. Since quality and reliability are core to Expeditors’ value proposition, repeated service failures outside its control can result in lost business. Even when capacity is available, the cost of securing it can vary significantly. Carriers adjust their pricing based on supply and demand. For example, during tight markets, ocean liners and airlines may reduce schedules or raise rates to improve profitability, which forces Expeditors to either pass on those higher costs to customers or absorb them, potentially squeezing margins. In some cases, customers may react by switching to cheaper shipping modes or delaying shipments altogether, reducing volumes and impacting Expeditors’ revenue. Another layer of risk is carrier behavior. Carriers can act unpredictably, cutting capacity, changing schedules, or prioritizing direct relationships with large shippers instead of working through forwarders like Expeditors. These shifts are out of Expeditors’ control but can affect its ability to deliver consistent service.

Reasons to invest

Expeditors’ investments in technology are a key reason to consider the company as a long-term investment. Although logistics is often seen as a physical industry, much of the work behind moving goods across borders now depends on strong digital systems. Expeditors made an early decision to build its own global technology platform to support its operations. This system connects all of its offices around the world and helps manage everything from shipment tracking to booking, quoting, data analysis, and customs compliance. What makes Expeditors stand out is that it builds and maintains this technology in-house, using professionals who understand the logistics business from the ground up. This gives the company more control, faster response times, and systems that are designed to solve real-world problems. The goal is not just to stay current with technology, but to make sure every investment adds real value to the business and its customers. As stated by management, Expeditors wants to stay at the cutting edge while keeping its focus on usefulness and long-term benefits. One major advantage of this approach is reliability. Expeditors’ systems help avoid delays, reduce errors, and ensure that shipments meet regulatory requirements. This is especially important in customs brokerage, where small mistakes can lead to big problems. By building its own systems and not depending on outside vendors, Expeditors can offer customers better service and adjust quickly when rules or market conditions change. Technology also plays a big role in customer satisfaction. The ability to provide accurate, real-time updates and consistent service across countries helps Expeditors build trust with large global clients. These systems also support future growth, making it easier to expand into new markets or launch new services without causing disruptions. In short, Expeditors’ technology investments are not just tools in the background. They are a core part of how the company delivers reliable service, stays efficient, and keeps customers coming back. In an industry where data, speed, and compliance are becoming more important every year, Expeditors’ focus on building the right technology in the right way gives it a lasting edge.

Long-term global trade and supply chain growth is a reason to invest in Expeditors. The company plays a central role in helping businesses move goods across borders, which means its performance is closely tied to the health of international commerce. Expeditors earns revenue by arranging shipments and charging customers for transportation and related services, while paying carriers for the space used. Its profitability depends on both shipment volumes and the difference between the price it charges and the cost it pays. Although global trade volumes can fluctuate in the short term due to recessions, geopolitical tensions, or inventory corrections, the long-term trend has been one of expansion. As economies grow and supply chains stretch across more countries, the movement of goods becomes more complex. This increases the need for specialized logistics services, especially those that can offer visibility, compliance, and reliability. Expeditors is well positioned to benefit from this. As companies seek to simplify their operations and manage costs, many choose to outsource logistics to partners with global networks and proven expertise. Expeditors fits that need. It offers a full range of services across air, ocean, and customs, backed by its own in-house technology and decades of operational experience. In short, as global trade continues to expand and supply chains become more interconnected, Expeditors stands to benefit from the growing demand.

A proven and flexible business model focused on profitable growth is a strong reason to invest in Expeditors. Unlike many logistics companies that own and operate their own aircraft, ships, or warehouses, Expeditors uses an asset-light model. This means it does not tie up capital in expensive fixed assets. Instead, it purchases space from air and ocean carriers as needed and sells that space to customers as part of a broader logistics solution. This model gives Expeditors several important advantages. First, it keeps fixed costs low. The company does not have to worry about maintaining fleets or dealing with the financial strain of underused assets when demand drops. As a result, it can adjust quickly when market conditions change, scaling operations up during strong trade periods and pulling back just as easily when demand slows. Second, it gives the company more financial flexibility. Since it is not spending heavily on physical infrastructure, it can focus its resources on areas that directly support profitability and service quality, such as technology, training, and customer relationships. It also helps the company maintain a debt-free balance sheet and strong free cash flow, which opens up options for reinvestment or returning cash to shareholders. Expeditors makes money by charging customers more for shipping services than it pays to the carriers that actually move the goods. The difference between these two amounts is where the company earns its profit. What makes Expeditors successful is its ability to price its services smartly, combine shipments efficiently, and choose the best routes. Thanks to its experience, strong technology, and long relationships with airlines and shipping companies, it can often get better deals and provide more reliable service than smaller or less specialized competitors.

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Valuation

Now it is time to calculate the share price. I perform three different calculations that I learned at a Phil Town seminar. If you want to make the calculations yourself for this or other stocks, you can do so through the tools page on my website, where you have access to all three calculators for free.

The first is called the Margin of Safety price, which is calculated based on earnings per share (EPS), estimated future EPS growth, and estimated future price-to-earnings ratio (P/E). The minimum acceptable rate of return is 15%. I chose to use an EPS of 5,72, which is from the year 2024. I have selected a projected future EPS growth rate of 7%. Finbox expects EPS to grow by 7,3% in the next five years. Additionally, I have selected a projected future P/E ratio of 14, which is double the growth rate. This decision is based on Expeditors' historically higher price-to-earnings (P/E) ratio. Finally, our minimum acceptable rate of return has already been established at 15%. After performing the calculations, we determined the sticker price (also known as fair value or intrinsic value) to be $38,94. We want to have a margin of safety of 50%, so we will divide it by 2. This means that we want to buy Expeditors at a price of $19,47 (or lower, obviously) if we use the Margin of Safety price.

The second calculation is known as the Ten Cap price. The rate of return that a company owner (or stockholder) receives on the purchase price of the company essentially represents its return on investment. The minimum annual return should be at least 10%, which I calculate as follows: The operating cash flow last year was 723, and capital expenditures were 40. I attempted to analyze their annual report to calculate the percentage of capital expenditures allocated to maintenance. I couldn't find it, but as a rule of thumb, you can expect that 70% of the capital expenditures will be allocated to maintenance purposes. This means that we will use 28 in our calculations. The tax provision was 283. We have 140 outstanding shares. Hence, the calculation will be as follows: (723 – 28 + 283) / 140 x 10 = $69,86 in Ten Cap price.

The final calculation is referred to as the Payback Time price. It is a calculation based on the free cash flow per share. With Expeditors' free cash flow per share at $4,88 and a growth rate of 8%, if you want to recoup your investment in 8 years, the Payback Time price is $53,57.

Conclusion

I believe that Expeditors is an intriguing company, and I also have confidence in its management. The company has built a moat through its exceptional execution, operational flexibility, and customer trust. It has consistently achieved a high ROIC over the past decade, while free cash flow has returned to more typical levels following three unusually strong years. Competition is a risk because the logistics industry is highly competitive and constantly evolving, with pressure coming from global players, local specialists, and tech-focused startups offering lower prices or more advanced tools. If Expeditors cannot continue to stand out through service, technology, and reliability, it may lose business or see its margins decline. Macroeconomic conditions are also a risk, as the business depends on global trade flows, which tend to weaken during downturns. Recessions, inflation, rising labor or fuel costs, and shifts in interest rates or currency values can all reduce volumes and increase costs. Another risk is the company’s reliance on service providers, since it does not own the transportation assets it depends on. This leaves it exposed to capacity constraints, price changes, and service disruptions outside its control. On the positive side, Expeditors’ investment in technology supports reliable, efficient, and scalable operations. By building its own systems, the company maintains greater control, faster response times, and strong compliance, which help differentiate its service in a data-driven industry. Long-term global trade and supply chain growth is also a reason to invest, as companies increasingly outsource logistics and seek partners with global reach and proven expertise. Expeditors is well positioned to benefit from this trend through its international network and operational strengths. Its proven and flexible business model is another strength. The asset-light approach keeps fixed costs low and allows the company to respond quickly to market changes while maintaining financial flexibility. It focuses on smart pricing, efficient shipment handling, and strong relationships with carriers to drive profitability. Overall, I believe Expeditors is a good company, but it operates in a sector where too many external factors can influence performance for my liking. Therefore, I will not be investing in Expeditors at this time.

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